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Writing a debt settlement request letter is a good way to negotiate your debt and to agree on a new financial agreement to either pay down or pay off your financial obligations. In terms of credit reporting, debt buying, and debt collection, paying off a debt without a documented written statement could prove to be a huge mistake. Unless the agreement is in writing regarding the exact amount that both you and the creditor are settling upon, it could come back to haunt you someday.

Debt Settlement Request Letter

When the creditor agrees to your offer, it’s crucial that you keep up with your payment plan. Develop a budget and stick to it at all costs. Track every penny that flows in and out of your account. It’s likely that the creditor will ask questions about your current budget.

How to Write a Debt Settlement Request Letter

Creating a debt settlement letter is one of the best ways to negotiate with creditors. If you’re having a hard time meeting all your financial obligations, this may be the best course of action to take.

No matter if you’re credit card debt is overwhelming you or you can’t make your mortgage payments, your credit score can be seriously harmed by financial delinquency. If you’re currently experiencing this, you’re not alone. Thousands of Americans file bankruptcy each year for a number of reasons whether it’s from job loss or serious health issues. The statistics reveal that even very financially responsible individuals sometimes face certain problems that are beyond their control and need a big dose of debt relief in order to help relieve their burden.

Writing a well-written debt settlement letter is a great tool if you’re seeking a plausible solution to protect your credit score or avoid bankruptcy. It’s the professional approach to let your creditors know just how much trouble you’re having honoring your financial obligations and that you’re requesting they negotiate a new payment agreement so you can finally pay them off.

Debt Settlement Tips

• Know your legal rights. In terms of settling debt, it’s crucial that you know your rights before you write and submit a letter. In fact, your letter is an actual legal document. Therefore, anything you say in your letter can be held against you in the event you have to go to court and face legal action.

• Financial creditors often choose what information they submit to the credit bureaus. As a result, you have the legal right to request that part of that information isn’t reported or actually removed in order to protect your credit score.

• Make your letter short and to the point. It’s a business letter, not a way to vent your frustration over your finances and tell your life story. Be as clear as possible and get straight to the point.

• It’s not absolutely necessary that you settle your debt with a collection agency. You can just as easily talk directly to your creditor. Collection agencies often pressure people since they get a percentage of your settlement.

• After your debt is settled, make sure everything is in good order by following up with the main credit bureaus. It’s very important to determine if your creditor honored their half of the agreement. Check with each credit agency upon settling your debt.

• Keep copies of all your written documents, including a copy of your debt settlement letter as well as any signed agreements, counter-offer-letters, receipts, or canceled checks to show the credit bureaus if necessary and to also protect yourself from potential legal action.

Sample 1 - Debt Settlement Request Letter

I am writing this letter that will serve as a formal offer to pay off my past due balance on my credit card of $680.00 with you, ABC Credit Card Company, account number 123456789. Due to my financial hardship, I cannot pay the entire balance in full. But, I am able to pay a lesser amount that I think is reasonable given my dire circumstances.

I want to formally request that if I agree to pay a one lump sum of $400.00, my account will then be paid-in-full and I will no longer receive any more bills or letters to pursue action against me.

If you agree to this one lump sum amount, I’m also asking that you do the following:

• Immediately close my account so no additional penalty fees or interest is applicable.
• You send a formal written confirmation of this agreement to my address and keep a copy on file.

Upon agreeing to my proposal and after receiving your confirmation in writing, I will readily pay the amount of $400.00 within 10 days of receiving your written confirmation using a certified check.

Sample 2 - Debt Settlement Request Letter

Consumer’s Name
Consumer’s Address
City, State, Zip Code

DATE

Recipient’s Name
Recipient’s Address
City, State, Zip Code

Dear Name of Recipient,

The purpose of this letter is to formally request a settlement for the medical bills I owe your hospital. I regret that I am unable to pay the bill in full at this time because my monthly income has been greatly reduced after the automobile accident in which I broke both of my legs.

I am requesting a payment plan of $100 per month until the time that I am able to continue working and receiving my usual salary. The rehabilitation may take from six to nine months. At this time, my income is $$$$ and I have a home mortgage of $$$$ to pay. I will pay by check on the 15th of each month beginning DATE.

If this is agreeable to you, kindly send me a letter stating the repayment details as I have described. I can be reached at 555-123-4567 or a [email protected], and I would be happy to talk to you and give you more details at any time.

Sincerely,
Signature of Consumer
Printed Name of Consumer
List of Enclosures

Sample 3 - Debt Settlement Request Letter

Consumer’s Name
Consumer’s Address
City, State, Zip Code

DATE

Creditor's Name
Creditor’s Address
City, State, Zip Code

RE: Account number

To Whom it may Concern:

This letter is a formal debt settlement request. Due to an automobile accident in which I was severely injured, I was not able to attend my job and have since been fired. Because of this, I have not been making regular monthly payments on my Name of Company credit card debt. When I am well, I will continue to work, so I would prefer not to apply for bankruptcy at this time and would like to work out an agreement with you for settling the debt.

Because my finances are in such bad shape, I am asking that my account be closed. I would like the interest charges, both accrued and future, be waived and a plan for monthly payments considered for the rest of the debt. I can offer AMOUNT every month to repay AMOUNT that is the current balance owed. I hope we can agree on a monthly payment that is suitable for us both.

I would also like to request that my account be shown as current and that all of the negative listings related to my account be deleted from the three major credit bureaus: Experian, Equifax and TransUnion.

I have enclosed a debt settlement agreement that you can sign and return to me if you are agreeable to the terms I have proposed. Please contact me by phone at 555-123-4567, email [email protected] or by letter to discuss the new monthly payment amount. I hope that we can agree on terms that will allow me to close this account and avoid bankruptcy because this is my best effort to repay you part of the balance owed.